Sales Tax by State 2026: Complete Guide to US Sales Tax Rates & Rules

Introduction

Sales tax is one of the most common taxes Americans encounter, yet it remains one of the most confusing. Unlike federal income tax, which follows a single set of rules nationwide, sales tax varies dramatically depending on where you live, what you buy, and whether you are shopping in a store or online.

In the United States, 45 states and the District of Columbia impose a statewide sales tax. On top of state rates, more than 10,000 local jurisdictions — cities, counties, transit districts, and special taxing authorities — add their own sales tax. The result is a patchwork of rates that can range from zero in states like Oregon and Delaware to more than 11% in parts of Louisiana, Tennessee, and Alabama when state and local rates are combined.

For consumers, understanding sales tax means knowing how much extra you will pay at the register. For small business owners and online sellers, it means navigating collection requirements, filing obligations, and nexus rules that determine where you must charge tax.

This guide covers everything you need to know about sales tax in 2026: every state's rate, how to calculate tax, exemptions, vehicle purchases, the IRS deduction, and online selling rules.

Use our free Sales Tax Calculator to instantly calculate the sales tax on any purchase.

What Is Sales Tax?

Sales tax is a consumption tax imposed by state and local governments on the sale of goods and, in some cases, services. It is collected by the seller at the point of sale and remitted to the appropriate taxing authority. Unlike income tax, which is based on what you earn, sales tax is based on what you spend.

How Sales Tax Works

When you purchase a taxable item, the seller adds the applicable sales tax percentage to the price. If you buy a $100 item in a jurisdiction with a 7% sales tax rate, you pay $107 at the register. The seller keeps $100 and sends the $7 to the state (and local government, if a local tax applies).

Sales tax is an ad valorem tax, meaning it is calculated as a percentage of the sale price. This distinguishes it from excise taxes, which are typically a fixed dollar amount per unit (such as gasoline taxes charged per gallon).

State vs. Local Sales Tax

Most states impose a base statewide rate. In addition, local governments — cities, counties, and special districts — may impose their own sales tax on top of the state rate. The combined rate is the sum of all applicable taxes at a given location.

For example, in Los Angeles, California, consumers pay the 7.25% state rate plus local taxes that bring the combined rate to 9.5%. In Chicago, Illinois, the combined rate reaches 10.25%.

The Concept of Nexus

Nexus is the legal term for the connection between a business and a state that triggers the obligation to collect and remit sales tax. Traditionally, nexus required a physical presence — a store, warehouse, or employee in the state. Since the landmark 2018 Supreme Court decision in South Dakota v. Wayfair, states can also establish economic nexus based on a seller's sales volume or number of transactions in the state, even without physical presence.

Understanding nexus is critical for any business that sells across state lines, whether through e-commerce, wholesale, or marketplace platforms.

Sales Tax Rates by State 2026

The following table lists the sales tax rate for all 50 states and the District of Columbia. The state rate is set by state law. The average local rate reflects the population-weighted mean of all local sales taxes within the state. The combined rate is the sum of the state and average local rates.

State	State Rate	Avg Local Rate	Combined Rate	Rank
Alabama	4.00%	5.27%	9.27%	5
Alaska	0.00%	1.82%	1.82%	46
Arizona	5.60%	2.80%	8.40%	11
Arkansas	6.50%	2.93%	9.43%	3
California	7.25%	1.60%	8.85%	8
Colorado	2.90%	4.89%	7.79%	16
Connecticut	6.35%	0.00%	6.35%	33
Delaware	0.00%	0.00%	0.00%	47
District of Columbia	6.00%	0.00%	6.00%	37
Florida	6.00%	1.02%	7.02%	22
Georgia	4.00%	3.38%	7.38%	18
Hawaii	4.00%	0.50%	4.50%	42
Idaho	6.00%	0.02%	6.02%	36
Illinois	6.25%	2.58%	8.83%	9
Indiana	7.00%	0.00%	7.00%	23
Iowa	6.00%	0.94%	6.94%	24
Kansas	6.50%	2.20%	8.70%	10
Kentucky	6.00%	0.00%	6.00%	37
Louisiana	4.45%	5.10%	9.55%	1
Maine	5.50%	0.00%	5.50%	40
Maryland	6.00%	0.00%	6.00%	37
Massachusetts	6.25%	0.00%	6.25%	34
Michigan	6.00%	0.00%	6.00%	37
Minnesota	6.875%	0.60%	7.475%	17
Mississippi	7.00%	0.07%	7.07%	21
Missouri	4.225%	4.00%	8.225%	13
Montana	0.00%	0.00%	0.00%	47
Nebraska	5.50%	1.44%	6.94%	24
Nevada	6.85%	1.38%	8.23%	14
New Hampshire	0.00%	0.00%	0.00%	47
New Jersey	6.625%	-0.03%	6.60%	30
New Mexico	5.125%	2.69%	7.82%	15
New York	4.00%	4.52%	8.52%	10
North Carolina	4.75%	2.23%	6.98%	23
North Dakota	5.00%	1.97%	6.97%	24
Ohio	5.75%	1.49%	7.24%	19
Oklahoma	4.50%	4.49%	8.99%	6
Oregon	0.00%	0.00%	0.00%	47
Pennsylvania	6.00%	0.34%	6.34%	33
Rhode Island	7.00%	0.00%	7.00%	23
South Carolina	6.00%	1.44%	7.44%	17
South Dakota	4.50%	1.90%	6.40%	32
Tennessee	7.00%	2.55%	9.55%	1
Texas	6.25%	1.95%	8.20%	14
Utah	6.10%	1.10%	7.20%	20
Vermont	6.00%	0.39%	6.39%	32
Virginia	5.30%	0.43%	5.73%	39
Washington	6.50%	2.70%	9.20%	7
West Virginia	6.00%	0.56%	6.56%	31
Wisconsin	5.00%	0.44%	5.44%	41
Wyoming	4.00%	1.44%	5.44%	41

Source: State revenue departments and the Tax Foundation. Rates reflect 2025 data as the best available approximation for 2026. Local rates are population-weighted averages and will vary by exact location within a state.

Key takeaways from the table:

Highest combined rates: Louisiana and Tennessee top the list at approximately 9.55%, followed by Arkansas at 9.43%.
Highest state rates: California leads with a 7.25% state-level rate, followed by Indiana, Mississippi, Rhode Island, and Tennessee at 7.00%.
Lowest non-zero rates: Colorado has the lowest state rate at 2.90%, but high local rates push its combined rate to 7.79%.
Five states have no state sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon.

States with No Sales Tax

Five US states impose no statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. Each has distinct reasons for forgoing this revenue source, and each compensates through alternative tax structures.

Alaska

Alaska is unique among the "no sales tax" states because it allows local governments to impose their own sales taxes. More than 100 boroughs and municipalities in Alaska levy local sales taxes, with rates ranging from 1% to 7.5%. The city of Juneau charges 5%, and Kodiak charges 7.5%. As a result, the statewide average local rate is approximately 1.82%.

Alaska funds its government primarily through oil revenues. The state has no individual income tax and no statewide sales tax. Instead, petroleum production taxes and royalties from North Slope oil fields have historically provided the majority of state revenue. The Alaska Permanent Fund, seeded by oil wealth, pays an annual dividend to every resident.

Delaware

Delaware has no sales tax and no local sales taxes. The state attracts businesses with its favorable corporate tax structure and is home to more than 1.8 million registered business entities — more entities than residents. Delaware compensates for the absence of sales tax with a relatively high personal income tax (top rate of 6.6%) and a gross receipts tax on businesses, which functions somewhat like a sales tax but is levied on the seller rather than the buyer.

Montana

Montana has no sales tax at either the state or local level. The state relies on individual income tax (top rate of 6.75%), property taxes, and natural resource extraction taxes (coal, oil, and gas). Montana also benefits from tourism revenue through accommodation taxes and resort taxes in specific localities, but these are narrowly targeted and not general sales taxes.

New Hampshire

New Hampshire has no general sales tax and no individual income tax on wages. It is one of the most tax-friendly states for consumers. However, it compensates with very high property taxes — among the highest in the nation, with an effective rate averaging about 1.86% of property value. New Hampshire also imposes a Meals and Rooms Tax (currently 8.5%) on restaurant meals, hotel rooms, and car rentals, which functions as a targeted consumption tax.

Oregon

Oregon has no sales tax and has repeatedly rejected ballot measures to introduce one. The state relies heavily on personal income tax, which has one of the highest top rates in the country at 9.9%. Oregon's lack of sales tax makes it a popular shopping destination for residents of neighboring Washington state (which has sales tax but no income tax). Oregon does impose a small Corporate Activity Tax (0.57%) on businesses with Oregon commercial activity exceeding $1 million.

How Sales Tax Is Calculated

Sales tax calculation is straightforward once you know the applicable rate. The basic formula is:

Sales Tax = Purchase Price x Tax Rate

Total Price = Purchase Price + Sales Tax

Or equivalently:

Total Price = Purchase Price x (1 + Tax Rate)

Worked Examples

Example 1: 6% sales tax

You purchase a laptop for $899.99 in a jurisdiction with a 6% sales tax rate.

Sales Tax = $899.99 x 0.06 = $54.00
Total Price = $899.99 + $54.00 = $953.99

Example 2: 7.25% sales tax (California state rate)

You buy a pair of shoes for $120.00 in a California location with only the state rate.

Sales Tax = $120.00 x 0.0725 = $8.70
Total Price = $120.00 + $8.70 = $128.70

Example 3: 8.875% sales tax (New York City)

You purchase a television for $549.00 in New York City, where the combined state and local rate is 8.875%.

Sales Tax = $549.00 x 0.08875 = $48.72
Total Price = $549.00 + $48.72 = $597.72

Understanding Combined Rates

When both state and local sales taxes apply, you simply add them together to get the combined rate. For instance:

Texas state rate: 6.25%
Houston local rate: 2.00%
Combined rate: 8.25%

A $50.00 purchase in Houston:

Sales Tax = $50.00 x 0.0825 = $4.13
Total = $50.00 + $4.13 = $54.13

Some jurisdictions also add special district taxes (transit, stadium, school) that further increase the combined rate. Always check the exact rate for your specific address, as rates can differ between neighboring jurisdictions.

Calculate your sales tax instantly with our Sales Tax Calculator.

Reverse Sales Tax Calculator — Finding Pre-Tax Price

Sometimes you know the total amount paid (tax included) and need to determine the original pre-tax price. This is called a reverse sales tax calculation, and it uses a different formula than simply multiplying the total by the tax rate.

The Correct Formula

Pre-Tax Price = Total Price / (1 + Tax Rate)

Sales Tax Paid = Total Price - Pre-Tax Price

Why You Cannot Just Multiply by the Rate

A common mistake is to take the total and multiply it by the tax rate to find the tax amount. This produces an incorrect (slightly inflated) result because the total already includes the tax.

Incorrect method: $107.00 x 0.07 = $7.49 (wrong)

Correct method: $107.00 / 1.07 = $100.00 (pre-tax price), so tax = $7.00

The difference may seem small on a single purchase, but it compounds quickly for businesses processing thousands of transactions.

Worked Example

You have a receipt showing a total of $86.52, and the sales tax rate was 8.25%.

Pre-Tax Price = $86.52 / (1 + 0.0825)
Pre-Tax Price = $86.52 / 1.0825
Pre-Tax Price = $79.93
Sales Tax Paid = $86.52 - $79.93 = $6.59

Verification: $79.93 x 0.0825 = $6.59, and $79.93 + $6.59 = $86.52. The numbers check out.

This reverse calculation is particularly useful for bookkeeping, expense reporting, and extracting tax from receipts that show only the total.

You can also use our percentage calculator to work through these percentage-based calculations.

Tax-Exempt Items

Not everything you buy is subject to sales tax. Most states exempt certain categories of goods from their sales tax to reduce the tax burden on essential purchases.

Common Exemptions

Groceries (unprepared food): About 30 states fully or partially exempt grocery items from sales tax. States like California, New York, and Texas exempt most unprepared food from their base state rate. However, states like Mississippi and Alabama tax groceries at the full state rate.

Prescription drugs: Nearly every state exempts prescription medications from sales tax. Only Illinois charges sales tax on prescriptions, and even there at a reduced rate of 1%.

Clothing: A handful of states exempt clothing from sales tax. New York exempts clothing items priced under $110 per item. Pennsylvania, New Jersey, and Minnesota also exempt most clothing. In most other states, clothing is fully taxable.

Medical devices and equipment: Hearing aids, prosthetics, wheelchairs, and similar medical devices are exempt in most states.

Resale Exemptions

Businesses that purchase goods for resale are generally exempt from paying sales tax on those purchases. Instead, sales tax is collected from the end consumer. To claim a resale exemption, the buyer must provide the seller with a valid resale certificate (also called a resale license or exemption certificate). This prevents double taxation — the same item being taxed when purchased wholesale and again when sold retail.

Variation by State

The patchwork of exemptions creates significant complexity. A box of candy bars might be tax-exempt as a grocery item in one state and fully taxable as a "candy" product in another. Prepared food (restaurant meals, deli items) is almost universally taxable, even in states that exempt groceries. When in doubt, check your state's department of revenue for specific classifications.

Sales Tax on Vehicles

Purchasing a car is one of the largest taxable transactions most consumers make. Vehicle sales tax rules have several unique features that differ from regular retail purchases.

How Vehicle Sales Tax Works

When you buy a vehicle, you pay sales tax based on the purchase price (or in some states, the vehicle's fair market value, whichever is higher). The tax is typically collected at the time of title registration by the state's Department of Motor Vehicles (DMV), not at the dealership — though dealers usually collect it on behalf of the state.

State Rate Examples

California: 7.25% state rate, plus local taxes that can push the combined rate above 10% in some cities. On a $35,000 car, that means $2,537 to $3,500+ in sales tax.
Texas: 6.25% flat rate on vehicle purchases. On a $35,000 car, the tax is $2,187.50.
Florida: 6% state rate plus local discretionary surtax (up to 1.5% in some counties). Most buyers pay between 6% and 7.5%.
Montana, Oregon, Delaware, New Hampshire: No sales tax on vehicle purchases.

Trade-In Credits

Many states allow a trade-in tax credit. If you trade in an old vehicle worth $10,000 and buy a new one for $35,000, you pay sales tax only on the difference ($25,000). This can save hundreds or thousands of dollars. However, not all states offer this credit — California and a few others do not reduce the taxable price for trade-ins.

Private Party vs. Dealer Purchases

Buying from a private seller does not eliminate sales tax. In most states, the buyer must pay use tax (the equivalent of sales tax) when registering the vehicle. The rate is the same as the sales tax rate. Some states use the higher of the purchase price or a standard book value to prevent buyers from underreporting the sale price to reduce tax.

For large purchases like vehicles, consider using our discount calculator to evaluate any dealer discounts before calculating tax.

Sales Tax vs. VAT

The United States is one of the few developed countries that uses a retail sales tax rather than a Value-Added Tax (VAT). While both are consumption taxes, they differ in fundamental ways.

Feature	US Sales Tax	Value-Added Tax (VAT)
Collection point	Collected once at final retail sale	Collected at every stage of production and distribution
Visibility to consumer	Added at checkout (not in listed price)	Usually included in the listed price
Tax cascading	No cascading (single-stage tax)	No cascading (tax credit mechanism)
Administrative burden	Falls primarily on retailers	Spread across all businesses in the supply chain
Rate uniformity	Varies by state and locality	Typically one or two national rates
Used by	United States	170+ countries (EU, UK, Canada, Australia, etc.)

Key Differences Explained

In a VAT system, every business in the supply chain charges VAT on its sales and receives a credit for the VAT it paid on its purchases. This "input tax credit" mechanism means the tax does not cascade — each business effectively pays VAT only on the value it adds. The final consumer bears the full tax burden, but collection is distributed across the supply chain.

In the US sales tax system, only the final retail sale is taxed. Intermediate transactions between manufacturers, wholesalers, and distributors are exempt (via resale certificates). This makes compliance simpler for businesses that are not retailers but puts the entire collection burden on the retail level.

The US sales tax approach results in lower administrative costs for non-retail businesses but creates challenges around enforcement, especially for e-commerce and digital goods.

IRS Sales Tax Deduction

Taxpayers who itemize deductions on their federal income tax return can deduct state and local taxes (SALT) under Section 164 of the Internal Revenue Code. This includes either state income tax or state sales tax — but not both.

Choosing Between Sales Tax and Income Tax Deduction

If you live in a state with no income tax (such as Texas, Florida, Washington, Nevada, Wyoming, South Dakota, or Tennessee), the sales tax deduction is your only option — and it can be valuable. Even in states with income tax, taxpayers who made large purchases during the year (a car, boat, or major home improvement) may benefit from deducting sales tax if the total exceeds their state income tax paid.

How to Calculate Your Deduction

The IRS provides two methods:

Actual expenses: Keep every receipt from the year and total the sales tax paid. This is precise but requires meticulous recordkeeping.
IRS Sales Tax Tables: Use the IRS-provided optional sales tax tables (found in the instructions for Schedule A) based on your income, family size, and state of residence. You can add the actual sales tax paid on major purchases (vehicles, boats, aircraft, home building materials) on top of the table amount.

The IRS also offers an online Sales Tax Deduction Calculator that automates the table-based calculation.

The $10,000 SALT Cap

Since the Tax Cuts and Jobs Act of 2017, the total state and local tax (SALT) deduction has been capped at $10,000 per return ($5,000 for married filing separately). This cap includes property taxes, state income taxes, and state sales taxes combined. For taxpayers in high-tax states, this cap significantly limits the benefit of the SALT deduction. The cap is currently scheduled to remain in effect — monitor congressional activity for potential changes.

You may also find our tip calculator useful when tracking total spending for your annual deduction calculations.

Online Sales Tax (Wayfair Decision)

Before 2018, online sellers were only required to collect sales tax in states where they had a physical presence — a store, warehouse, or employees. This gave e-commerce businesses a significant price advantage over local retailers. The Supreme Court changed this with its decision in South Dakota v. Wayfair, Inc. (2018).

The Wayfair Decision

In South Dakota v. Wayfair, the Court overturned the 1992 Quill Corp. v. North Dakota precedent and held that states can require out-of-state sellers to collect and remit sales tax based on economic nexus — a threshold based on sales revenue or number of transactions in the state, even without physical presence.

South Dakota's law, which the Court upheld, set the threshold at $100,000 in sales or 200 transactions in the state during the current or prior calendar year. Most states have since adopted similar thresholds, though the specific numbers vary.

Economic Nexus Thresholds

Following Wayfair, nearly every state with a sales tax has enacted economic nexus laws. Common thresholds include:

$100,000 in sales (most states, including California, New York, Texas, and Florida)
$100,000 in sales or 200 transactions (the original South Dakota model, adopted by many states)
$500,000 in sales (California and Texas initially used this higher threshold before lowering it)

Impact on E-Commerce Sellers

For online sellers, the Wayfair decision created new compliance obligations. A seller based in one state may now have nexus in dozens of states and must register, collect, and remit sales tax in each. Marketplace facilitator laws (adopted by most states) shift this burden to platforms like Amazon, Etsy, and eBay, which now collect and remit sales tax on behalf of third-party sellers for sales through their platforms.

However, sellers using their own websites must manage multi-state compliance themselves, often with the help of automated sales tax software such as Avalara, TaxJar, or Vertex.

Frequently Asked Questions

Do I need to charge sales tax if I sell online?

If you have nexus — either physical or economic — in a state, you must collect and remit sales tax on taxable sales to customers in that state. Economic nexus thresholds typically start at $100,000 in annual sales to the state. If you sell through a marketplace like Amazon or Etsy, the marketplace likely handles collection for you. If you sell on your own website, you are responsible for compliance. Check each state's Department of Revenue website for specific thresholds and registration requirements.

Are services taxable?

It depends on the state and the type of service. Most states primarily tax the sale of tangible personal property (physical goods). However, a growing number of states tax certain services. Hawaii and New Mexico tax nearly all services. Many states tax specific categories such as landscaping, cleaning, repair services, and digital services (streaming, SaaS). Professional services like legal, accounting, and medical care are generally exempt. Always verify with your state's tax authority.

What is a sales tax holiday?

A sales tax holiday is a temporary period — usually a weekend or a week — during which a state suspends sales tax on specific categories of items. The most common type is a back-to-school tax holiday in late summer, when states waive tax on clothing, school supplies, and computers up to a certain price threshold. In 2025, approximately 20 states offered sales tax holidays. Items and price limits vary by state. Florida, Texas, and Ohio are among the states that regularly hold these events.

How do I report sales tax?

Businesses registered to collect sales tax must file periodic sales tax returns — monthly, quarterly, or annually depending on sales volume and state requirements. Returns are filed with each state where you have nexus. The return reports total sales, taxable sales, exempt sales, and the tax collected. Most states offer online filing portals. Late filing incurs penalties and interest. Many businesses use automated sales tax software to track collections across multiple jurisdictions and generate return-ready reports.

Is shipping taxable?

This varies significantly by state. Some states (California, Virginia, Missouri) generally exempt shipping and delivery charges from sales tax, provided the charges are separately stated on the invoice. Other states (Texas, New York, Ohio) generally tax shipping as part of the total sale price. A few states tax shipping only when it is combined with handling charges. The rules often depend on whether the shipped items themselves are taxable and whether the shipping charge is listed separately from the product price. Check your state's specific rules.

What happens if I don't collect sales tax?

Failure to collect and remit sales tax when required can result in serious consequences. The state can assess back taxes, penalties (typically 10% to 25% of the unpaid tax), and interest on the amount owed — for the entire period during which you should have been collecting. In extreme cases, state tax authorities can pursue personal liability against business owners, revoke business licenses, or refer cases for criminal prosecution (though criminal cases are rare and usually involve intentional fraud). Voluntary disclosure agreements (VDAs) allow businesses to come into compliance with reduced penalties.

Conclusion

Sales tax is a fact of life for most American consumers and businesses. With 45 states, the District of Columbia, and thousands of local jurisdictions each setting their own rates and rules, the system is inherently complex. Whether you are making a major purchase, starting an online business, or filing your tax return, understanding how sales tax works — and how it varies by state — can save you real money.

The fundamentals are simple: sales tax equals the purchase price multiplied by the applicable rate. But the details — exemptions, vehicle rules, nexus requirements, and deduction strategies — reward those who take the time to learn them.

Calculate your sales tax on any purchase with our free Sales Tax Calculator.